Randall: Milwaukee is dying

Long known as one of the nation’s most segregated cities, Milwaukee has a new ignoble distinction bestowed upon it,ranking dead last for startups. As an owner of several successful startups, I decided to weigh in on exactly what I think is weighing us down.

Abandon Hope, Ye Who Enter Here

When I was 22 and freshly graduated into the worst recession since the great depression with a dual Finance/Marketing degree, I founded a viral marketing agency from my bedroom. Anyone with even a cursory understanding of the marketplace could see, the traditional ad agency model was dying and platforms like YouTube were the new frontier. I recruited the world’s best niche video editors and within 6 months I was in John Lasseter’s office signing a long term production deal with Walt Disney/Pixar. The agency, Reverse Enginears, was a modest success, going on to deliver over 100 Million views for clients like J&B Whiskey, The United Nations, Microsoft and Showtime Studios. Longstanding agencies like Weiden+Kennedy and Borders Perrin & Norrander came knocking on my small door to solve the problems they couldn't. My time at the helm of that agency left me with the conclusion that every company is more or less in the talent management business - e.g. recruiting and keeping the best talent is crucial to maintaining a competitive advantage in a cut-throat marketplace. I’m 31 now, and it was only after I traveled the world and came back home to Milwaukee that I realized that cities are in the very same business, and my city is failing hopelessly at it.

My sister moved to Chicago a few years back. I wondered loudly and often, how she could to move to such a cutthroat and notoriously corrupt city? “It may be corrupt,” she said, “but it’s equal opportunity corrupt.” She was a UW-Madison graduate with an MBA, I wondered how does a city like Chicago keep poaching our best and brightest? A magnet across the room is unlikely to affect your smartphone, but one in the same pocket is. With top tier cities like Chicago in such close proximity, it’s a very attractive alternative to a third tier city like Milwaukee for up and coming talent.

We’ve heard politicians speak ad-nauseam about brain drain but do nothing about it when given the chance, and it’s beginning to bear its fruit. Milwaukee is, to its own detriment, obsessed with race in one way or another, and those racial tensions have been manifesting on the national stage as of late in the form of race riots on the north side and BLM protests. We all know of our long standing segregation problem, but lately startups and our ranking last in them, have come up more and more. I’ve heard no shortage of state and municipal political officials asking where’s all the black talent at? The ‘stay on the straight and narrow, college educated, good credit, diversity like my sister at’? The answer is obvious, they’re leaving, and they are taking their ideas with them.

Milly-wau-kee: The Bad Land

In the same way correlation does not imply causation, our city’s segregation doesn’t necessarily mean it’s filled with racists. I’ve been all over the world and don't personally feel like Milwaukee is a particularly racist city - on the contrary Midwest cordiality is alive and well here. Even in the Third Ward where I stand out like a sore thumb, people greet me as, I would assume, they would anyone else and are generally friendly. But still the contrast between neighborhoods is stark, so much so that it’s one of the first things far-flung out of towners who visit note. I have a lot of German friends and speak the language well enough. One such friend visiting me noted in German what loosely translated to, ‘we should simply rename the third ward the third reich.’ A rough joke to stomach even by American standards, but unlike us, the Germans rarely make jokes about such things and generally lack America’s ability to poke fun at ourselves over our nation's darkest moments. Which is why I know he wasn't joking, he was making an apt observation and one I couldn't then answer. Where are all the 30-something diverse innovators? Why when I look out my window overlooking the Public Market do I see nobody who looks like me? If I could answer him now, it would be to say segregation is a symptom not an underlying cause, and I believe it’s our city’s investment scene that stands out as a primary factor preventing the kind of upward mobility more diverse cities like Atlanta and Chicago boast.

I registered my latest business venture in March of this year. I quit my job at Harley-Davidson because I had an idea to make bio-ethanol burning furniture affordable. I sent a Chinese manufacturer I found on Alibaba some of my designs. Within three weeks I had a prototype on my doorstep. In another three weeks I had made revisions and had a final market ready product in my living room. At $399, it was a fraction of the price of my nearest competitor which started at well over $1200. I coded my website, shot my own photos, did my own photoshop, created my own graphics in after effects, and established my own end to end international logistics supply chain. Northern Elements was live...now how to go to market?

Unlike my first venture, ReverseEnginears, which was a service, this was a product, requiring capital to finance manufacture. So I quickly began making the rounds in the city’s tiny investment scene, and ran headfirst into some very old and well established hurdles.

The first observation is that angels here are extremely conservative - they don't invest in products they personally wouldn't buy, regardless of whether it's intended for them or not, and regardless of what evidence for those other demographics suggests. That’s a bad business practice as a rule of thumb. Another problem is when xenophobia rears its subtle but ugly head, as they protest at the idea of products being manufactured in China despite having a house filled with similarly made goods. (Saying "they took our jobs!" is probably a lot easier than admitting "they're out-competing us!")

Then there are the VC’s. We have a few truly good ones, gener8or comes to mind. But the VC groups are painfully slow, often tailored for people in the idea stage, not those ready to go to market, much less having already gone there, with prolonged mandatory incubator programs lasting months, sometimes years. They unanimously express serious concern about not having patents, which demonstrates a poor understanding of the new economy wherein being first, these days, is the best protection for a product like mine. A US legal document than can be easily gotten around with even one millimeter of modification, my lawyers tell me, isn't worth the paper it’s printed on for hardware with few moving parts like mine, and it’s why the majority of things you buy on your Amazon Prime account don’t have a patent either. Nine times out of 10 it’s a comfort document for those who like a good fiction story, facts and costs be damned.

This left me going to SBA Express loan route which has been, to put it mildly, the absolute worst. While on paper, I qualify completely, SBA loans are given out via accredited lenders who often themselves have no business experience on staff leaving them incredibly inept at picking and choosing who should and shouldn't get the meager sums they have access to. It’s why all of their rosters read less like a who’s who of household name companies, and more of foot traffic convenience shops and nail salons. Between WWBIC, MEDC, and several other government subsidized organizations with mandates to invest in startups exactly like mine, the excuses were frequent and often paradoxical. “We don't loan to businesses under a year old” or to businesses “without any sales” made frequent appearances, despite that being the definition of a startup. But those are self imposed rules, not federal mandates. Once the ones I do qualify for are left, it's apparent they’re highly bureaucratic and poorly managed.

The DMV is oft cited as an example of what happens when no competition exists, e.g. they have no incentive to do better because there's not exactly a private market equivalent granting valid licenses so their approval rating suffers because it can, and we all tolerate them as best we're able to. A similar problem exists at these government funded agencies - they rarely if ever have anyone on staff who has run a successful business in the private market where satisfactory customer experiences can mean the difference between thriving and going bust. And why would they care? As the old adage goes those who can’t do, teach - the new adage should be those who can't hack it privately, go public. In my world showing up late and going AWOL on meetings would eventually be a death knell of my venture, but not so for government propped initiatives like WWBIC where 1-star google reviews have no bearing on how much federal breadcrumbs they get apportioned. My mother, who sits on a board at Alverno recently met with them for an unrelated deal of her own and asked what if any metric do they have to measure the efficacy or success of their loans - she never did get an answer and I don’t think she ever will.

My paperwork was "mis-processed" a total of three times at WWBIC alone, requiring to me to re-begin the application process time and again over a dreadful six month period. WWBIC even insisted I go to a Web Tutorial class that I could’ve probably taught, teaching me how to do such intricacies as uploading a photo (to the website I coded) and creating a social media account. An inane mandatory requirement that has no bearing on the merits of an investment, but exactly the kind of side-quest diversion and tone deafness to a new tech savvy generation I’d expect from a government agency desperately out of touch with the pace of the private market. Once applied for, the review process would begin and would take another few months. It never did because after the 3rd "misprocessing" of my paperwork I walked out.

After banging my head against the SBA wall for a few months and feeling the time crunch of my season approaching, I decided to reach out to the private market. In a single email thread consisting of less than five messages each, I found a willing partner at www.touchofmodern.com, the nation's largest flash sale men's website boasting four million unique views a month. With no paperwork whatsoever and over the course of three days, I sent them my prototype for their photography wizards to work their magic, and they went live with a pre-sale in July. And so it was done. Within a span of 5 days they sold $10,000 worth of my flagship prototype units and they cut me a check. No contracts. No protracted paperwork. They couldn't even pick me out of a lineup because they don’t even know what I look like. They don't care about my race, they didn’t care about making me a token on their wall-o-diversity, all they cared about was my product and whether or not it could sell. They quickly do their diligence to establish I'm a real business entity, and waste no time generating revenue off of that. In five days San Francisco made me more progress, and money, than I did in six months of concerted effort at home. Is it any wonder with that kind of efficiency one could question what if anything but sheer misguided loyalty keeps talent in a city asking its innovators to constantly expend orders of magnitude more effort for a fraction of the payoff by swimming upstream?

For example, UW-Milwaukee School of Continuing Education over the course of at least three meetings materialized nothing but several email links to publicly known local startup competitions with top "prizes" being not even a single digit fraction of what I'd need. Brightstar met with me only to refer me personally to a pre-production Wisconsin version of a local Sharktank style show - after I went I was told I now qualified for the "second round" of tank pitches which if went well, could then qualify me for the final round of panelists that may be selected to go on the show that may or may not air in the next year, and which if it does, those in attendance may or may not select my business. That's quite a lot of "if's", and "maybes" and didn't appeal to me but my contact at Brightstar was perplexed as to why I didn't want to do it; as far as he was concerned they were doing me a favor and I should be so lucky. It wouldn't be the first time this city showed its notorious propensity to ask startups to endure all manner of Hunger Games style, last business standing, fight to the death contests, which essentially allows them to shirk getting involved until the last possible moment. But by then they're no longer needed, and the company has likely moved to a city where I'm told you can, get this, simply approach people who fund your kind of niche, and get your niche funded.

The waiting time for delivery on that TouchofModern sale was 11 weeks, giving me enough time take the funds to manufacturing, deliver via sea freight and send to final buyers, with enough leftover to buy myself some much needed hardware and studio upgrades. With some sales and some discretionary funds the city expresses more interest, but now it’s me who's not so sure about working with them. Why not just go to Kickstarter and reincorporate in a state that actually embraces business? If that many people bought my product with an 11 week waiting period, I thought, imagine what it could be if I could cut that down to standard two day delivery on Amazon! "What has my city done for me lately" I ask?

This is a city that lives on its bygone legacy. But like the companies it lives by, so too it will die by them. Having personally worked at Harley Davidson, their multiple lawsuits, mass layoffs, concurrent under-performing fiscal quarters, and the most annual recalls in company history means they can’t carry on the way they are. Miller with its highly publicized shuffling between international beverage conglomerates is anything but Milwaukee made anymore. Time is taking its toll and the legacy companies are dying, but there's nothing to take their place, and we as a city have nobody to blame for that but ourselves. There won’t be a Milwaukee Mark Zuckerburg, or Peter Thiel. There won’t be a renaissance or any more global companies started here because the innovation has ground to a halt and been replaced by bureaucrats and politicians who would rather drone on about a brain drain problem in ivory tower exclusive pay-to-play brunches featuring their latest bandwagon token achievement.

If I had a nickel for every time some SBA employee referred me to the same black investors in this city they could count on one hand, I'd retire at 31. “Have you talked to Corey Nettles?” Why should I, I’m not a black businessman, I’m a businessman who happens to be black. I don’t want black money, I want merit money.

On paper, I'm everything the city says it wants. Every opportunity afforded to me, diverse, I grew up affluent, college educated, with good credit and a head full of market vetted ideas - yet I can get nowhere in this city. On paper, all my documents are in order and my venture is a safe bet. Only on paper. What the Austins and Chicagos understand that Milwaukee doesn’t, is that money itself is cheap. Business School 101 taught me that money on its own doesn’t make economies expand, ideas do. You need an investment vehicle, otherwise that paper under your mattress will become worth a lot less when you go to use it 10 years later due to depreciation, inflation, and rising costs of living. That’s how banks work, they take your savings and loan them out to others with ideas and create value from it. At least that’s how it works elsewhere -- ideas that create value where it didn’t previously exist are expanding other cities and ours is contracting because we don't. Legacy-idea types are leaving and taking their ideas with them because the treatment they get is insulting. I shouldn’t have to have, much less ask, rich parents for a loan. I shouldn’t have to go to a black investor because I'm black. I shouldn't have to know someone who knows someone. There should be a clearly defined, easy to replicate path that anyone with an idea, from any background, with disregard to their station in life and means, can submit that idea and have it considered for funding on merit alone. We don't have that and we never have.

Mill-What?

By any metric we have everything a city could ever want. Natural resources in abundance, perched alongside one of the largest freshwater sources on earth. No routine natural disasters like tornadoes or earthquakes ravaging our infrastructure. But its crumbling all the same. This place is ankle weights for innovators, of any color. Whether our tone deaf politicians embrace it or not, a new era of business is upon us and it’s not one that looks fondly on the kind of slow going, handshakes and golf outing old-boys networks that regressive cities like Milwaukee live by. It's progressive and it frowns on anything resembling selective treatment. That's why I don't want to have lunch with your guy on the inside. I don't want you to introduce me to your third cousin’s best friend’s baby sitter who knows someone. I don’t want to get in through the backdoor. I want to able to tell the next kid in some inner city school with a bright idea that he too can make it, despite not having the "hook up". They should be able to submit their paperwork online. And once. They should get a "No" or a "Maybe" within 48 business hours max. If that "maybe" doesn't lead to a sit down in the next week, and a final decision in the days thereafter, you're moving too slow for the new economy and will get left behind. Time favors not the smartest or strongest, but the most responsive to change. And like everything that can’t adapt to change, it will die.

A mentor once told me of an odd metric he measured a city by -- he said go to the busiest street in the biggest city of that state and if they have a lot of commercial real estate sitting vacant, the writing's on the wall that if the city isn’t already dying, it soon will be. Sure enough, living on Water St, in the third ward, in our state’s biggest city, the turnover for businesses is egregious. This is where the aforementioned ineptitude bears its fruit...Milwaukee doesn’t need another bar, or froyo shack or nail salon paying low skilled people low incomes. It needs new legacy companies -- and people with those ideas are leaving in droves, with nothing but commercial real estate vacancies in their wake as the rust belt makes its way across Michigan by way of Detroit, to soon engulf this city too.

In 2012 I ran a longshot, but ultimately successful, crowdfunding campaign on the brand new Kickstarter platform, raising $50,000 to film on location in the Kingdom of Bhutan for three weeks. It was one of the most remote locations I’ve ever been to. Four transfer flights later, my business partner and I were on the other side of the world filming in the Himalayan foothills, and about as far from home as one could be. I distinctly recall telling the locals where I was from, or trying to at least. They knew of my partner’s city in Australia. And they even knew of my own neighbors, Chicago and Minneapolis, but not Milwaukee. “Uh, Harley Davidson”, I nervously said to a local sat atop a Royal Enfield motorcycle as he said in broken English ,“Those things the most efficient way turn money into noise!” as they all laughed. Hard. (He wasn’t far off, Royal Enfield has since put it’s North American Headquarters smack dab here in the Third Ward, no doubt taking a swipe at Harley while it tries to live a little bit longer off the cult of personality they've developed by focusing on selling merchandise and not the $50,000 recall machines that have become their namesake.)

Years later I still feel like my city is the butt of a bad joke. Miller is not, as my French and German friends noted, even close to being the "champagne of beers", nor is it uniquely Milwaukee. Harley makes crappy overpriced bikes and has become a generation's punchline on South Park for guys having a midlife crisis and seeking attention - certainly nobody my age wants one. We’re named dead last for startups. We're consistently ranked as one of the worst places to live for anyone of ethnic diversity. Our highest-paid resident in the state is, in fact, a basketball coach. The only time I see our name on the national news is for our race riots. Grand Avenue Mall is a ghost town shell of its former self that could be rented to low budget filmmakers shooting post apocalyptic dystopias. We’re a forgettable third tier city with all the cold weather and none of the good skiing. Our neighboring cities’ worst days are better than our best years. We hemorrhage good graduating talent from our colleges like an undressed wound. All the while “what wound?” seems to be the attitude of choice for anyone of influence in the city. They've been playing dumb for so long that we’re no longer just behind, we are dead last, and in so many important metrics it's becoming hard to keep count. I hear the same refrain like a song stuck in my head from mentors: Unless you have some sick family members or something else keeping you here against your will, leave this city for one that isn’t going to try and see how young it can cause you to die from old age.

Sure, Chicago is a bunch of insufferable big city snobs, and they drive like maniacs, that much is not in dispute, but they have a point. We have no culture here. Even the POTUS said he can’t wait to go back to his city. Ever known anyone from Milwaukee to make it big and wish the same thing? Me neither. Quick name the city’s top three redeeming features: 1) The Art Museum 2) Bradford Beach? 3) Uh.. Exactly. Nothing remarkable, probably due in part because everyone's walled off with surgical like precision in racial sections like the city put a shock collar around their necks - a city that can’t mix can’t collaborate and gets stale quick. Even our state’s most notable sports franchise, The Packers, isn’t from here. I’d even settle for a local musician cracking the billboard charts at this point but even our music scene is virtually non existent. I could go on for pages - everyone in my family knows a sure fire way to get one hour of original standup material out of me is to give me a beer, and ask me what I think about Milwaukee - but you get the point. Hats off to the guys who want to stick around and fight the “ black struggle,” but newsflash guys, The Civil Rights Act is half a century old. Nothing is holding Milwaukee back these days but itself. You can’t help someone who doesn’t want to be helped. We have the same funds earmarked that other states and cities get, we’ve just elected incompetent politicians who have managed ours worse. And we continue to do it. The city’s political race-hustlers keep talking but what are they really even saying?

People don't become successful because of Milwaukee, they become successful in spite of it.

The city is, in a word, dying. People in the inner city have little hope of upward mobility and even less to lose because they look at someone like me who can't get ahead, and wonder how on earth could they? Regardless of color, hopelessness is a dangerous cocktail to leave stewing, in time it will always boil over. The truth is guys like me, we’re businessmen, not martyrs. We have loyalty, but only to a point. Innovators go where the winds of opportunity blow, and they're blowing far far away from here. With no incentives to stay, we leave. The city’s on a one way collision course with the dustbin of history, and there won’t be any bail outs for your manufacturers when they go under, so do yourself a favor and get off at the very next stop, I'll buy you a round of Chicago’s best when you get there. Tick-talk Milwaukee....